SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 13, 1996
------------------------------
Leggett & Platt, Incorporated
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(Exact name of registrant as specified in its charter)
Missouri 1-7845 44-0324630
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
No. 1 Leggett Road, Carthage, MO 64836
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (417) 358-8131
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(Former name or former address, if changed since last report.)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Leggett & Platt, Incorporated (the "Company") acquired Pace Holdings, Inc.
("Holdings") of Fayetteville, Arkansas on May 13, 1996. The acquisition was
accomplished through the merger (the "Merger") of a wholly owned subsidiary of
the Company into Holdings. As a result of the transaction, Holdings became a
wholly owned subsidiary of the Company. Pace Industries, Inc. ("Pace"), the
principal operating subsidiary of Holdings, also became a subsidiary of the
Company as a result of the transaction.
Pursuant to the merger, the Company issued approximately 5,134,000 shares
(the "L&P Shares") of its common stock ("L&P Stock"), $.01 par value, to the 40
shareholders of Holdings, including certain Holdings directors and executive
officers. Set out below is further information concerning the directors,
executive officers and holders of more than 5% of the common stock of Holdings
("Holdings Stock").
Shares of Holdings
Stock Beneficially
Owned Prior to Merger
-----------------------
Name and Address Shares Percent
- ---------------- ------ -------
KP Holdings, L.P.* 103,000 31.2%
c/o Kenner & Company, Inc.
437 Madison Avenue
New York, NY 10022
UBS Capital LLC 48,000 14.5%
299 Park Avenue
New York, NY 10171-0026
Bob L. Gaddy 43,215** 13.1%
c/o Pace Holdings, Inc.
One McIlroy Plaza, Suite 401
Fayetteville, AR 72701
James F. Keenan 29,794 9.0%
211 Seaview Avenue
Palm Beach, FL 33480
Alice L. Walton 20,000 6.1%
c/o Llama Company
One McIlroy Plaza, Suite 301
Fayetteville, AR 72701
James D. Starkey 16,196 4.9%
c/o the Company
One McIlroy Plaza, Suite 401
Fayetteville, AR 72701
J. Scott Bull 13,661 4.1%
c/o the Company
One McIlroy Plaza, Suite 401
Fayetteville, AR 72701
* Jeffrey L. Kenner and John M. Baldwin were directors of Holdings and
executive officers of Kenner & Company, Inc. Each is therefore deemed to
beneficially own these shares.
** Includes shares held by trusts which Mr. Gaddy serves as Trustee.
Bob L. Gaddy, the Chairman and Chief Executive Officer of Holdings, has
been elected as a director and senior vice president of the Company.
Each share of Holdings Stock, issued and outstanding immediately prior to
the effective date of the Merger (the "Effective Date") was converted, pursuant
to the terms of the Merger including provisions for adjustments to the merger
consideration, into the right to receive approximately 15.7124 shares of L&P
Stock and cash in lieu of fractional shares.
Holdings was a privately owned company with annual sales of about $200
million for the fiscal year ended June 30, 1995. Holdings and its primary
operating subsidiary, Pace Industries, Inc., is a leading manufacturer of non-
automotive aluminum die cast products. Products manufactured and sold by
Holdings and its subsidiaries include die castings for gas barbeque grills,
outdoor lighting, electrical motors, clean room flooring and other consumer
and industrial products. Holdings and its subsidiaries operate approximately
eight manufacturing facilities. The Company intends to continue the general
lines of business acquired in the Holdings transaction.
ITEM 7(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
(1) The following consolidated financial statements of Pace Holdings, Inc.
are incorporated by reference from the Company's Registration
Statement on Form S-3 (Registration Number 333-03233).
Financial Statements -- June 30, 1995 and 1994 -- Audited
Report of Independent Accountants
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Stockholders' Equity
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
(2) Financial Statements -- March 31, 1996 -- Unaudited
Consolidated Condensed Balance Sheet at March 31, 1996 and
June 30, 1995
Consolidated Condensed Statement of Operations for nine months
ended March 31, 1996 and March 31, 1995
Consolidated Condensed Statement of Cash Flows for nine months
ended March 31, 1996 and March 31, 1995
Notes to Consolidated Condensed Financial Statements
ITEM 7(b) PRO FORMA FINANCIAL INFORMATION
1. Leggett & Platt, Incorporated and Subsidiaries and Pace Holdings, Inc.
and Subsidiary Pro Forma Condensed and Combined Balance Sheet as of
March 31, 1996 (Unaudited)
2. Leggett & Platt, Incorporated and Subsidiaries and Pace Holdings, Inc.
and Subsidiary Pro Forma Condensed and Combined Statement of Earnings
for the Three Months Ended March 31, 1996 (Unaudited)
3. Leggett & Platt, Incorporated and Subsidiaries and Pace Holdings, Inc.
and Subsidiary Pro Forma Condensed Combined Statement of Earnings for
the Twelve Months Ended December 31, 1995 (Unaudited)
4. Leggett & Platt, Incorporated and Subsidiaries and Pace Holdings, Inc.
and Subsidiary Pro Forma Condensed Combined Statement of Earnings for
the Twelve Months Ended December 31, 1994 (Unaudited)
5. Leggett & Platt, Incorporated and Subsidiaries and Pace Holdings, Inc.
and Subsidiary Notes to Pro Forma Condensed Combined Financial
Statements (Unaudited)
ITEM 7(c) EXHIBITS
See Exhibit Index
PACE HOLDINGS, INC.
AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
PACE HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEET
(Dollars in Thousands Except Shares and Par Value)
(Unaudited)
ASSETS March 31, June 30,
1996 1995
--------- ---------
Current assets:
Cash and cash equivalents $ 785 $ 254
Accounts and notes receivable, net 53,848 42,016
Inventories 57,666 25,429
Other current assets 2,440 357
--------- ---------
Total current assets 114,739 68,056
--------- ---------
Property, plant and equipment:
Less accumulated depreciation and amortization of $9,605 at
March 31, 1996 and $5,894 at June 30, 1995 60,678 48,148
Excess of investment over net assets acquired 74,741 70,374
Other assets 8,533 10,915
--------- ---------
Total assets $ 258,691 $ 197,493
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 4,272 $ 671
Accounts payable 35,076 25,850
Accrued liabilities 10,818 7,062
--------- ---------
Total current liabilities 50,166 33,583
--------- ---------
Long-term debt 169,714 129,129
--------- ---------
Subordinated notes 20,000 20,000
--------- ---------
Other long-term obligations 1,610 1,374
--------- ---------
Deferred income taxes 6,018 7,950
--------- ---------
Commitments and contingencies (Note 4)
Minority interest in subsidiary 2,216 2,041
--------- ---------
Stockholders' equity:
Common Stock, par value $.01 per share:
Class A, voting, 1,000,000 shares authorized,
300,000 shares issued and outstanding 3 3
Class B, non-voting, 26,163 shares authorized,
14,492 shares issued and outstanding - -
Additional paid-in capital 38,119 29,997
Carryover basis adjustment attributable to the continuing
management stockholders (31,079) (31,079)
Retained earnings 1,924 4,495
--------- ---------
Total stockholders' equity 8,967 3,416
--------- ---------
Total liabilities and stockholders' equity $ 258,691 $ 197,493
========= =========
See accompanying notes to consolidated condensed financial statements.
PACE HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(Dollars in Thousands)
(Unaudited)
Nine Months Ended
March 31,
-------------------------
1996 1995
---------- -----------
Net sales $ 141,585 $ 117,107
Cost of sales 114,996 92,992
---------- -----------
Gross profit 26,589 24,115
Selling, general and administrative expenses 10,878 7,812
Amortization of intangibles 4,705 4,361
---------- -----------
Operating income 11,006 11,942
Other income (expense):
Interest expense (15,876) (13,171)
Other income 65 (77)
---------- -----------
Loss before income taxes (4,805) (1,306)
Income tax benefit 2,409 346
---------- -----------
Loss before minority interest (2,396) (960)
Minority interest in (income)
loss of consolidated subsidiary (175) 134
---------- -----------
Net loss $ (2,571) $ (826)
========== ===========
See accompanying notes to consolidated condensed financial statements.
2
PACE HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Nine Months Ended
March 31,
-------------------------
1996 1995
---------- -----------
Cash flows from operating activities:
Net loss $ (2,571) $ (826)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation 3,725 2,904
Amortization 5,395 5,025
Loss (gain) on sale of property, plant and equipment (2) 16
Minority interest in loss (income) of consolidated subsidiary 175 (134)
Deferred income taxes (1,932) (567)
Change in assets and liabilities:
Accounts and notes receivable (10,460) (3,931)
Inventories (30,547) (23,264)
Other current assets (2,083) (356)
Other assets (496) (1,899)
Accounts payable 9,042 9,553
Accrued liabilities 2,423 2,594
---------- -----------
Net cash provided by (used in) operating activities (27,331) (10,885)
---------- -----------
Cash flows from investing activities:
Purchase of property, plant and equipment (11,060) (7,232)
Proceeds from sale of equipment 14 123
Acquisition of business 91 -
Payment of deferred cost - (1,359)
Collection of notes receivable 342 365
---------- -----------
Net cash provided by (used in) investing activities (10,613) (8,103)
---------- -----------
Cash flows from financing activities:
Proceeds from long-term debt 41,621 18,705
Payments of long-term debt (860) (689)
Payments of other long-term obligations (36) -
Payment of deferred loan fees (275) -
Proceeds from minority interest - 965
Redemption of Class B shares (1,975) -
---------- -----------
Net cash provided by (used in) financing activities 38,475 18,981
---------- -----------
Net increase (decrease) in cash and cash equivalents 531 (7)
Cash and cash equivalents - beginning 254 473
---------- -----------
Cash and cash equivalents - ending $ 785 $ 466
========== ===========
Supplementary disclosure of cash flow information:
Cash paid during the period for:
Income taxes $ 2,808 $ 1,626
Interest 12,005 9,527
Non-cash investing and financing activities:
Equipment acquired by issuance of note payable 1,500 -
Business acquired by issuance of stock 10,097 -
See accompanying notes to consolidated condensed financial statements.
PACE HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited)
NOTE 1. GENERAL
In the opinion of management, the accompanying consolidated condensed
financial statements contain all adjustments (adjustments are of a normal
recurring nature) necessary to present fairly the consolidated financial
position of Pace Holdings, Inc. and Subsidiary (the "Company") as of March 31,
1996 and June 30, 1995, and the consolidated results of operations for the nine
month periods ended March 31, 1996 and 1995 and the consolidated cash flows for
the nine month periods ended March 31, 1996 and 1995. Results of operations for
the nine months ended March 31, 1996, are not necessarily indicative of results
which will be achieved for the full fiscal year.
NOTE 2. INVENTORIES
The components of inventory are as follows:
March 31, June 30,
1996 1995
--------- --------
Finished Goods $32,036 $ 8,811
Work-In-Process 5,518 4,199
Raw Materials 12,777 6,364
Supplies 7,335 6,055
------- -------
$57,666 $25,429
======= =======
NOTE 3. RELATED PARTIES
The Company has provided administrative, marketing and distribution
functions to an affiliated company at the Company's cost. The affiliated
company has performed verti-cast die casting operations, similar to a sub-
contractor, using raw materials provided by the Company pursuant to a supply
agreement between the Company and the affiliated company. Billings to the
Company for services provided by the affiliated company were $4.3 million and
$7.8 million during the nine months ended March 31, 1996 and 1995, respectively.
Effective December 1, 1995, the Company discontinued this relationship.
NOTE 4. CONTINGENCIES
In connection with the acquisition of Universal Die Casting, Inc.
("Universal") assets by Precision Industries, Inc. ("Precision"), an entity
subsequently acquired by the Company during fiscal 1990, the National Labor
Relations Board ("NLRB") filed a complaint based on an unfair labor charge filed
by the union representing the former employees of Universal. The complaint
alleges that the Company refused to hire former employees of Universal because
they were union members and refused to bargain with the union. It seeks back pay
and benefits, together with interest thereon, from October 18, 1988, and
reinstatement on behalf of 81 individuals. In May 1993, the administrative law
judge in a recommended order, rendered a decision against the Company. The
recommended order would require the Company to recognize and bargain with the
union and to offer immediate and full reinstatement of 61 employees and make
such
4
employees whole for any loss of earnings and other benefits suffered as a result
of the alleged discrimination against them. However, under applicable law, such
damages would generally be reduced by the amount of mitigation, if any, by such
individuals, including salary and benefits earned by such individuals since
October 18, 1988. The Company filed an appeal to the full NLRB in Washington and
exceptions to the administrative law judge's recommended order. On January 3,
1996, the NLRB rendered its decision on the Company's appeal by affirming the
administrative law judge's decision and recommended order against the Company.
The Company has appealled the NLRB's decision to the Eighth Circuit Court of
Appeals in St. Louis, Missouri and will contest individual backpay
specifications in NLRB compliance proceedings, if necessary. During August 1994,
the Company began implementation of a plan to offer employment to certain of
these individuals, which offers, in the event there was an unfavorable outcome
to the Company regarding this matter, would toll the accrual of any further back
pay and benefits. The Company believes its hiring practices were objective and
complied with all labor laws and that the individuals were denied employment for
legitimate reasons. The Company and special litigation counsel have concluded
that it is only reasonably possible that there could be an adverse outcome with
respect to these proceedings.
On May 23, 1994, TRW Inc., an Ohio corporation ("TRW") filed a complaint
styled as TRW Inc. v. Pace Industries, Inc. and Pace Industries Cast-Tech
Division, Inc., No. 94CV71983DT, in United States District Court in the Eastern
District of the State of Michigan alleging that the Company breached supply
contracts between the parties in 1991 and 1992 and seeking compensatory damages
of $4.7 million and punitive damages of $10 million. On November 2, 1994, the
Company filed an answer and counterclaim to the TRW complaint denying the
allegations in the TRW complaint and claiming compensatory damages approximating
$12 million relating to: (i) the nonpayment of invoices for parts ordered and
accepted by TRW; (ii) the nonpayment by TRW for parts ordered, but not accepted
and (iii) the breach of certain promises and misrepresentations by TRW regarding
assets and tooling purchased by the Company for the purpose of manufacturing and
supplying parts requested by TRW. On August 2, 1995, TRW filed an amended
complaint alleging essentially the same breach of contract claims for the $4.7
million of compensatory damages and an unspecified amount of exemplary damages,
although the $10 million claim for punitive damages was removed from the
litigation in the amended complaint by TRW. The Company intends to vigorously
pursue the counterclaim against TRW, while defending the allegations in the TRW
amended complaint, which the Company believes are without merit. The Company and
its counsel have concluded that it is only reasonably possible that there could
be an adverse outcome with respect to the TRW litigation. A rescheduled trial
date, of June 18, 1996, has been set with respect to this litigation and
discovery is currently in process.
NOTE 5. INCOME TAXES
The effective tax rate differs from the statutory rate primarily due to
amortization of goodwill which is not deductible for tax purposes. The
effective tax rate was calculated based on projected taxable income for the full
fiscal year and the anticipated changes in the deferred tax assets and deferred
tax liabilities.
NOTE 6. CLASS B COMMON STOCK
The Company had issued 18,329 shares of Class B Common Stock, that can be
put to the Company on specific dates beginning in January of 1996, giving the
Class B Shareholders the right to sell shares of the Class B Common Stock to the
Company at contractually specified prices. The put option had a total
contractual value of $10,097. During January 1996, 3,837 shares were put by the
Class B Shareholders for a total price of $1,975,000.
5
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
AND
PACE HOLDINGS, INC. AND SUBSIDIARY
PRO FORMA CONDENSED COMBINED BALANCE SHEET
MARCH 31, 1996
(Unaudited)
The following pro forma condensed combined balance sheet combines balance sheets
of Leggett & Platt, Incorporated and Subsidiaries (Leggett) and Pace Holdings,
Inc. and Subsidiary (Pace) at March 31, 1996, under the assumptions set forth in
the accompanying notes. The pro forma condensed combined balance sheet should be
read in conjunction with the separate financial statements and notes thereto of
Leggett and Pace. The pro forma condensed combined balance sheet is not
necessarily indicative of the financial position of the combined companies as it
may be in the future.
Pro Forma Adjustments
Historical -------------------------
--------------------- Note Pro Forma
Leggett Pace Amount Reference Combined
--------- ------- ------------------------- ---------
ASSETS
Current Assets
Cash and cash equivalents $ 3.9 $ 0.8 $ $ 4.7
Receivables 283.1 53.9 337.0
Inventories 278.3 57.6 (2.8) (6) 333.1
Other current assets 38.2 2.4 40.6
--------- ------- ------- ---------
Total current assets 603.5 114.7 (2.8) 715.4
Property, Plant and Equipment - at cost 831.4 70.3 901.7
Less accumulated depreciation and amortization 369.5 9.6 379.1
--------- ------- ------- ---------
Net Property, Plant and Equipment 461.9 60.7 0.0 522.6
Other Assets
Investments in and advances to associated companies 5.6 0.0 9.9 (3) 5.6
(9.9) (4)
Goodwill, net 138.5 74.7 213.2
Sundry 52.9 8.5 (4.4) (7) 57.0
--------- ------- ------- ---------
TOTAL ASSETS $ 1,262.4 $ 258.6 $ (7.2) $ 1,513.8
========= ======= ======= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts and notes payable $ 83.4 $ 35.1 $ $ 118.5
Accrued expenses and other liabilities 169.2 15.0 184.2
--------- ------- ------- ---------
Total current liabilities 252.6 50.1 0.0 302.7
Long-Term Debt 175.3 189.7 27.2 (5)(8) 392.2
Deferred Income Taxes and Other Liabilities 68.0 7.6 (10.2) (9) 65.4
Minority interest in subsidiary 0.0 2.2 2.2
Shareholders' Equity
Common stock 0.8 0.0 0.1 (3) 0.9
Additional contributed capital 152.2 7.1 (7.6) (3)-(5) 151.7
Retained earnings 625.2 1.9 (16.7) (3)(4)(6)-(9) 610.4
Cumulative translation adjustment (5.0) 0.0 (5.0)
Less treasury stock (6.7) 0.0 (6.7)
--------- ------- ------- ---------
Total shareholders' equity 766.5 9.0 (24.2) 751.3
--------- ------- ------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,262.4 $ 258.6 $ (7.2) $ 1,513.8
========= ======= ======= =========
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
AND
PACE HOLDINGS, INC. AND SUBSIDIARY
PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
THREE MONTHS ENDED MARCH 31, 1996
(Unaudited)
The following pro forma condensed combined statement of earnings combines the
operations of Leggett & Platt, Incorporated and Subsidiaries (Leggett) and Pace
Holdings, Inc. and Subsidiary (Pace) for the three months ended March 31, 1996.
This statement has been prepared under the assumptions set forth in the
accompanying notes. This statement should be read in conjunction with the
separate financial statements and notes thereto of Leggett and Pace. The pro
forma condensed combined statement of earnings is not necessarily indicative of
the results of operations of the combined companies as they may be in the future
or as they might have been had the acquisition been effective January 1, 1996.
Pro Forma Adjustments
Historical -------------------------
--------------------- Note Pro Forma
Leggett Pace Amount Reference Combined
--------- ------- ------------------------- ---------
Net sales $ 524.2 $ 67.1 $ $ 591.3
Costs, expenses and other
Cost of goods sold 393.9 54.2 0.0 (6) 448.1
Selling, distribution, administrative and other, net 68.1 5.6 73.7
Interest expense 2.6 5.7 (2.5) (7)(8) 5.8
--------- ------- ------- ---------
Total costs, expenses and other 464.6 65.5 (2.5) 527.6
--------- ------- ------- ---------
Earnings before income taxes 59.6 1.6 2.5 63.7
Income taxes 23.2 0.6 0.1 (9) 23.9
--------- ------- ------- ---------
Net Earnings $ 36.4 $ 1.0 $ 2.4 $ 39.8
========= ======= ======= =========
Net Earnings Per Share $ 0.43 $ 0.44
Average common and common
equivalent shares outstanding 85.2 90.3
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
AND
PACE HOLDINGS, INC. AND SUBSIDIARY
PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
TWELVE MONTHS ENDED DECEMBER 31, 1995
(UNAUDITED)
(Amounts in Millions, except per share)
The following pro forma condensed combined statement of earnings combines the
operations of Leggett & Platt, Incorporated and Subsidiaries (Leggett) and Pace
Holdings, Inc. and Subsidiary (Pace) for the twelve months ended December 31,
1995. This statement has been prepared under the assumptions set forth in the
accompanying notes. This statement should be read in conjunction with the
separate financial statements and notes thereto of Leggett and Pace incorporated
by reference or included in this report. The pro forma condensed combined
statement of earnings is not necessarily indicative of the results of operations
of the combined companies as they may be in the future or as they might have
been had the acquisition been effective January 1, 1995.
Historical Pro Forma Adjustments
------------------- ---------------------
Note Pro Forma
Leggett Pace Amount Reference Combined
--------- -------- ------- ---------- ---------
Net sales $2,059.3 $198.6 $ $2,257.9
Costs, expenses and other
Cost of goods sold 1,568.3 158.0 2.6 (6) 1,728.9
Selling, distribution, administrative and other, net 258.8 19.0 277.8
Interest expense 11.5 20.7 (5.9) (7)(8) 26.3
-------- ------ ----- --------
Total costs, expenses and other 1,838.6 197.7 (3.3) 2,033.0
-------- ------ ----- --------
Earnings before income taxes 220.7 0.9 3.3 224.9
Income taxes 85.8 1.1 1.3 (9) 88.2
-------- ------ ----- --------
Net Earnings $ 134.9 $ (0.2) $ 2.0 $ 136.7
======== ====== ===== ========
Net Earnings Per Share $ 1.59 $ 1.52
Average common and common equivalent shares outstanding 84.9 90.0
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
AND
PACE HOLDINGS, INC. AND SUBSIDIARY
PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
TWELVE MONTHS ENDED DECEMBER 31, 1994
(UNAUDITED)
(Amounts in Millions, except per share)
The following pro forma condensed combined statement of earnings combines the
operations of Leggett & Platt, Incorporated and Subsidiaries (Leggett) and Pace
Holdings, Inc. and Subsidiary (Pace) for the twelve months ended December 31,
1994. This statement has been prepared under the assumptions set forth in the
accompanying notes. This statement should be read in conjunction with the
separate financial statements and notes thereto of Leggett and Pace incorporated
by reference or included in this report. The pro forma condensed combined
statement of earnings is not necessarily indicative of the results of operations
of the combined companies as they may be in the future or as they might have
been had the acquisition been effective January 1, 1994.
Historical Pro Forma Adjustments
------------------- ---------------------
Note Pro Forma
Leggett Pace Amount Reference Combined
--------- -------- ------- ---------- ---------
Net sales $1,858.1 $151.4 $ $2,009.5
Costs, expenses and other
Cost of goods sold 1,429.1 116.1 1.3 (6) 1,546.5
Selling, distribution, administrative and other, net 229.7 15.7 245.4
Interest expense 9.8 17.3 (7.3) (7)(8) 19.8
-------- ------ ----- --------
Total costs, expenses and other 1,668.6 149.1 (6.0) 1,811.7
-------- ------ ----- --------
Earnings before income taxes 189.5 2.3 6.0 197.8
Income taxes 74.1 1.2 2.3 (9) 77.6
-------- ------ ----- --------
Net Earnings $ 115.4 $ 1.1 $ 3.7 $ 120.2
======== ====== ===== ========
Net Earnings Per Share $ 1.39 $ 1.36
Average common and common equivalent shares outstanding 83.1 88.2
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
AND
PACE HOLDINGS, INC. AND SUBSIDIARY
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in Millions, except share data)
Note 1: The pro forma statements reflect Leggett & Platt, Incorporated's
(Leggett) acquisition of all of the outstanding voting common shares of
Pace Holdings, Inc. (Holdings) in exchange for approximately 5.1
million shares of Leggett's common stock in a transaction accounted for
as a pooling of interests. The pro forma condensed combined balance
sheet presents the acquisition of Pace Holdings, Inc. and Subsidiary
(Pace) as if it had occurred on March 31, 1996, while the pro forma
condensed combined statements of earnings for the three months ended
March 31, 1996 and the twelve months ended December 31, 1995 and 1994
present the acquisition as if it had occurred on January 1 of each
year. Only statements of earnings since 1994 are presented due to
Holdings' leveraged buyout of Pace Industries, Inc. in December, 1993.
Note 2: Pace has previously had a June 30 fiscal year end. The pro forma
condensed combined financial statements were prepared by restating
Pace's operating results to Leggett's December 31 fiscal year end.
Such presentation aligns comparable fiscal (calendar) quarters for Pace
and Leggett, and provides a basis for future comparability of combined
results. Pace's operating results are seasonal, with significant sales
and operating profits occurring in the first two calendar quarters of
the year.
Note 3: To record shares issued by Leggett for Holdings' voting common shares.
Note 4: To eliminate Leggett's investment in Holdings.
Note 5: To reflect the exercise of put options under change in control
provisions by holders of Holdings' non-voting stock.
Note 6: To adjust inventories to LIFO cost method to conform Pace's accounting
policies to those of Leggett.
Note 7: To eliminate debt issuance fees and related amortization.
Note 8: To reduce interest expense on debt which would have been retired
through the issuance of new debt with lower interest rates and to
recognize additional borrowing for merger related expenditures.
Note 9: To record the tax benefit on the items in Notes 6, 7 and 8.
Note 10: If the Merger is consummated, Leggett will incur up to $45 in
nonrecurring merger costs relating to debt restructuring, transaction
fees, the exercise of stock options and other contractual obligations.
These costs will be charged to the combined results of operations
during the current year and are not reflected in the pro forma
statements of earnings.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Leggett & Platt, Incorporated
__________________________________
Registrant
May 24, 1996 /s/ Michael A. Glauher
_________________________ __________________________________
Date Signature
Exhibit Index
Exhibit Sequential
Number Description Page Number
- ------ ----------- -----------
2 Merger Agreement..............................
23 Consent of Coopers & Lybrand..................
99 The following consolidated financial statements of Pace
Holdings, Inc. are incorporated by reference from the Company's
Registration Statement on Form S-3 (Registration Number 333-
03233).
Financial Statements -- June 30, 1995 and 1994 -- Audited
Report of Independent Accountants
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Stockholders' Equity
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements